Kyanite: A strategic alternative for Russia’s aluminium industry?

By IM Staff
Published: Saturday, 21 May 2016

As Russia looks at reducing its bauxite imports amid geopolitical tensions, developing the Bolshie Keivy kyanite deposits near Murmansk to supply alumina to the domestic aluminium industry is a possible, if unlikely, route to self-sufficiency, Vladislav Vorotnikov, IM Correspondent, writes.

For several decades Russia’s government has been looking at possible options to develop a large kyanite-rich area on the Kola Peninsula in the northern Murmansk Oblast. 

Named Bolshie Keivy, meaning "big caves", the area contains 23 kyanite deposits with total estimated reserves of around 11bn tonnes, accounting for 90% of Russia’s kyanite resources, making it the largest identified occurrence of the mineral in the world. 

As well as being an important refractory mineral, kyanite also has the potential to be used as an alternative to bauxite as a source of metallurgical alumina. This possibility has been considered by Rusal, Russia’s leading and the world’s second largest aluminium company, but the profitability of developing Bolshie Keivy has for a long time been doubtful. 

This situation may change over the next few years, however, as a group of Russian scientists aim to demonstrate the economic feasibility of substituting bauxite for kyanite in aluminium making. 

The Russian government has indicated its support for the project and in view of the bauxite deficit currently facing Rusal, the chances that Bolshie Keivy may become Russia’s next kyanite producer are looking marginally more likely.

Kyanite 

Russia holds the world’s largest kyanite reserve.

Demand for alternatives to bauxite

Russia ranks second in the world in terms of aluminium production, with output of around 3.5-4m tpa, making up 12.5% of the world total. Alumina, the main raw material for aluminium making, is produced from bauxite, a rock ore consisting of aluminum, iron and silicon oxides. 

According to official Russian statistics, domestically produced Russian bauxite accounts for around 45% of the material consumed by the country’s aluminium plants, meaning that more than half of Russia’s bauxite needs are imported. The aluminium industry is deemed strategically important for Russia and its reliance on foreign bauxite supply has been repeatedly noted by the national government, particularly in the context of the international sanctions levied against Russia owing to its role in the Ukraine conflict.

In 2014, the year in which Russia annexed the Ukrainian territory of Crimea, Russian businesses feared the sanctions would shut them off from the Society for Worldwide Interbank Financial Telecommunication (SWIFT), which would have created significant problems for companies with assets and partner businesses abroad.

Although this did not happen, these fears spurred calls to establish more raw materials operations within Russian borders to reduce future geopolitical risks to industry.

Russia has a lack of high quality bauxite deposits, most being small and located at significant depths from the surface. Given current weak prices for aluminium, there is little profit to be made in exploring for new reserves.

One alternative could be to produce alumina from Russia’s large reserves of nepheline, however these ores have a low aluminium oxide content and would be expensive to process. 

Draft plans for Bolshie Keivey

Researchers from the Kola Scientific Institute of the Russian Academy of Science recently unveiled provisional plans for the construction of a kyanite mining and processing plant at Bolshie Keivy. 

"Kyanite contains more than 60% alumina, although today it is mainly used for the production of refractory materials," explains Yuri Voytekhovsky, head of the Kola Scientific Institute.

"About 90% of Russian kyanite is concentrated in the Bolshie Keivy mountain range. It consists of 23 mineralised fields with ore reserves estimated at 966m tonnes, lying at depths of up to 100 metres. Overall reserves are thought to be around 11bn tonnes. The accessibility of large quantities of mineralisation at relatively shallow depths makes it possible to extract the kyanite via open pit mining, which does not require large expenditure, Voyekhovsky said.

The institute’s draft plans envisage building a 3.2m tpa capacity mining and processing plant to produce 1m tpa kyanite concentrate. Of this, preliminary estimates indicate that 650,000 tonnes could be used to make high-alumina refractories, while the remaining 350,000 tonnes will be suitable for aluminum alloys. 

The full cost of implementing the project is expected to be close to $2bn. The payback period will largely depend on market prices, but is currently expected to be around 15 years. These do not seem like attractive terms for investors, however Kola Institute researchers point out that the largest part of the capital expenditure required is for infrastructure and could be significantly reduced with the help of government funding.

Located within the Arctic Circle, the Kola Peninsula is one of the most northerly mainland territories in Russia and has few roads or power links in addition to a harsh climate. But the region also hosts deposits of more than 1,000 different minerals, around 150 of which are not found anywhere else in the world.

As well as kyanite, the peninsula has been found to contain deposits of apatite-nepheline ore, iron, nickel, platinum group metals, rare earths, lithium, titanium, garnet, ceramic pegmatites, mica and vermiculite.

"Despite all the challenges [facing the development of Kola’s mineral resources], the area does some have logistical advantages," a spokesperson for the Kola Scientific Institute noted. They pointed out that 70km away from Bolshie Keivy on the Barents Sea coast lies the village of Gremikha with an ice-free seaport, which would allow mineral concentrates to be shipped to nearby Russian port cities, such as Murmansk or Arkhangelsk.

"As for electricity, the solution could be the construction of a thermal power plant running off natural gas," the spokesperson added. "The government of the Murmansk Oblast is planning to build a gas pipeline in the region, so if these plans become reality, there would be no problems fuelling a power plant."

More minerals

Proponents of the development of Bolshie Keivy also cite a number of recent studies indicating that a mining operation in the area could be designed to produce several minerals in addition to kyanite, which would boost the profitability of the project.

"Kyanite ores from the Bolshie Keivy complex are composed of minerals including selenium, ilmenite, staurolite and several others," says Voytekhovsky. "Staurolite concentrate can be a very valuable mineral. At least one Russian steel plant has implemented a new steelmaking technology which uses staurolite, rather than imported Mongolian fluorite, as a flux."

According to Julia Neradovskay, one of the Kola Scientific Institute team working on the Bolshie Keivy proposals, the institute is most interested in the possibility of producing rare earths as byproducts of the kyanite operation.  "If we could extract rare earths concentrates as well, this would increase the overall value of the ores for processed from the complex," she said.

Reasonable doubts

Despite the optimism of the Kola Institute researchers about the future Bolshie Keivy, the project’s commercial feasibility remains questionable.

"Unfortunately, representatives of scientific community and manufacturers have different views on the development kyanite deposits," says Oleg Kazanov, the chief geologist of the Central-Kola expedition, which conducted the field study at Bolshie Keivy. "Kyanite is undoubtedly of interest as a raw material and Russia’s reserves of it are enormous. But I believe that the development of Bolshie Keivy is unlikely to begin in the next 20 years."

"First, the location of the deposits is too remote. Second, at the moment there are no guaranteed customers for its output. And third, primary aluminum producers currently have sufficient alternative sources of bauxite from nepheline tailings." 

"Roughly speaking, aluminium ores can be divided into two types: oxide and silicate. Oxide ores include bauxite, which is more profitable for processing. Processing silicate ores such as kyanite is a very energy-intensive process and probably only likely in the distant future. Aluminium manufacturers are not ready make the substantial changes to their production technology required to utilise kyanite," he added.

The lack of commercial interest in developing Bolshie Keivy is further evidenced by the fact that the regional government offered the mineral rights for sale by tender two years ago, but no bids have yet been made.

"All in all, the benefits of Bolshie Keivy are also its weak points," notes Alexei Pichugin, a representative of the Murmansk Oblast government’s Department of Industry. 

"A company wishing to launch the project will first need to develop technology for complex processing of mineral ores. The local resource base is unique and would require a tailored flowsheet design. Assuming a suitable processing route is developed, the company would then have to find potential customers for its products, which is the really big challenge."

Tepid interest

Even those who believe that developing Bolshie Keivy is a realistic possibility admit that, in the current market conditions, the only potential investor with the resources to see the project through is Rusal. But Rusal, currently battling low aluminium prices and looking to cut costs, is unlikely to consider investing in such a scheme in the near future.

In mid-2013, Rusal suspended operations at its Volgogradsky, Uralsky, Bogoslovksy and Nadvoitsky aluminium plants in response to low aluminium prices.

The company has indicated that aluminium prices are almost $1,000/tonne below the $2,400/tonne level needed to make these facilities pay, so it seems certain that Rusal will not consider switching to use the more costly kyanite as a raw material until prices have recovered.

"Potentially, the development of [Bolshie Keivy] could be attractive," commented a company source. "We need to conduct large-scale studies prior to making any decisions, and if we did decide to proceed, it would not happen before 2018, when we expect world prices for aluminium to have returned to more comfortable levels," they added.

"Today, when the most companies in the natural resource sector are fighting for each dollar they can get it is hard to imagine that we will go for such big project," they added.

"The arguments about the need for the company to transfer to domestic raw materials are persuasive, but today it is definitely not the best time for such activities."